BEIJING — The deep chill between the United States and China eased a bit in the past few days as Treasury Secretary Janet Yellen held marathon talks with a new group of top economic policymakers in Beijing.
Yellen used softer language for US economic strategy toward China, disavowing a term that had caught on in Washington but offended Beijing. Still, while further talks are a likely outcome of Yellen’s trip to China, neither she nor Chinese officials have backed down from their political stances. This has left both sides facing the prospect of further disputes over trade, investment and technology.
She has forged ties with Chinese economic leaders.
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Last fall, the Chinese Communist Party Congress paved the way for the country’s President Xi Jinping to install a new team of loyalists in the top economic posts. Officials – including Yellen’s counterpart, Deputy Prime Minister He Lifeng – generally have less international experience than their predecessors and are less familiar to Western policymakers. China has also gradually reduced the publication of economic information, suppressing many reports, making it harder to know what is really happening in the Chinese economy.
One of Yellen’s main goals was to meet the new Chinese team. She also wanted to understand what is happening in China’s economy, which rebounded more slowly than expected this year after China lifted nearly three years of strict pandemic measures.
At least on those narrow goals, Yellen appears to have had some success as she held interviews totaling 10 hours with four of China’s top economic decision makers, in particular He. While the Biden administration has held several rounds of high-level diplomatic talks with China, these were the first such economic talks under that administration.
R. Nicholas Burns, the US ambassador to China, said the reopening of economic talks “is very much in our interests, to directly deliver tough messages on issues we disagree on.” and engage where our interests align with the world’s second largest economy. ”
She used a new D-word for supply chains: “miscellaneous.”
Chinese officials, keen on the language of diplomacy, have strenuously opposed calls in Washington in recent years for the US economy to separate or “decouple” from China’s. They fear multinational corporations will move their vast supply chains and tens of millions of jobs from China to other countries.
European Commission President Ursula von der Leyen proposed a softer, more neutral term in March: “de-risking.” Chinese officials and state media initially had little objection to the risk reduction, but began denouncing it after US national security adviser Jake Sullivan used it in a speech a month earlier. late.
Yellen sought several times during her trip to assuage China’s concerns that the United States was seeking to decouple, and she even avoided mentioning risk reduction. Rather, she said that the United States wanted various supply chains – which also happens to be a long-standing public policy goal of China.
“There is an important distinction between decoupling, on the one hand, and, on the other, diversifying critical supply chains or taking targeted national security measures,” she said.
The Biden administration argues that recent limits it has imposed on high-tech exports to China, including the most advanced semiconductors, are narrowly focused on US military security. The administration has tried to characterize its actions as building a high fence around a small tech park.
But even after Yellen’s visit, many in China are skeptical. While the United States presents the policies as “just for national security, the question is how big is the national security court,” said Wu Xinbo, dean of international studies at Fudan University in China. Shanghai.
She offered no new policies. Neither does China.
A press conference held by Yellen on Sunday and a separate statement by China’s state-run Xinhua news agency clearly lacked any suggestion that even one of the many trade, investment and technology issues between the two countries had been resolved.
China on Monday imposed restrictions on the export of two critical metals, gallium and germanium, used in computer chips. China produces almost all of the world’s supply of both materials. The export controls were widely seen as retaliation for U.S. limits on semiconductor exports to China, though Beijing did not call its measure a retaliation. Yellen, speaking on CBS’ “Face the Nation” on Sunday, said the move was “potentially” retaliatory.
Beijing is also bracing for the long-discussed possibility that the Biden administration could limit U.S. investment in certain high-tech sectors of the Chinese economy. China imposed its own restrictions on overseas investment in 2015. Beijing dissuaded businesses and households in the country from speculating in American real estate and European football clubs and instead pushed them to buy foreign companies in aircraft production, heavy manufacturing, artificial intelligence, cybersecurity and others. strategic sectors.
Yellen nonetheless tried to put an optimistic spin on her visit on Sunday, as she sought to refute speculation that conflict could be inevitable.
“Navigating the contours of the U.S.-China relationship is no easy task, but we must never forget that, despite the challenges, our path is not predestined,” she said. declared.
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